Saudi Aramco to tap bond market amid low gearing at around 5%, CEO says
RIYADH: Saudi Aramco will continue tapping bond markets in the future despite maintaining one of the lowest gearing ratios in the energy industry, according to a top official.
In an interview with Bloomberg, Aramco President and CEO Amin Nasser said the oil giant's gearing ratio, a financial metric that compares a company's debt to its equity, is currently around 5 percent. That's significantly lower than the industry average, where many peers operate with levels between 15 and 20 percent.
'Our gearing today is around 5 percent — still one of the lowest gearing, you know. It's almost half of the average compared to other energy industry players in the market, and we will continue to tap into that additional bond markets in the future,' Nasser said.
He continued: 'But we have a low gearing ratio, which still, as you consider it, is very low compared to any players in the markets.'
The low gearing ratio, which reflects strong financial discipline and limited reliance on debt, is part of what enables Aramco to maintain stability amid market fluctuations.
Gearing is commonly used by analysts and investors to assess a company's financial leverage, with lower ratios often indicating a stronger balance sheet and reduced financial risk.
In the interview, Nasser also reaffirmed the company's commitment to maintaining high dividends. 'We have a strong balance sheet, and our dividend is one of the highest, the highest globally. We're expecting to pay dividends that go to the majority shareholder and other shareholders, which is the government, of $85.4 billion this year.'
He said the company benefits from having spare capacity, which allows it to bring more barrels to the market. 'For every million barrels, that will have a huge impact on our net income. I would say it will give you a $10 cushion for every million barrels that you put into the market.'
Nasser added: 'We have today close to 3 million barrels of spare capacity, so other companies do not have that to cushion any drop in prices. For us, we do have that spare capacity that is healthy, strong, and when you put it, it allows you to increase significantly your net income.'
He emphasized the company's ability to withstand lower oil prices due to its operational efficiency and robust infrastructure.
'We are the lowest cost producer. Our extraction cost is $3, and it still is $3. And with low extraction cost, healthy balance sheet, and our investment that is continuing to be capturing opportunities that we have,' Nasser said.
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